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Wall Street does not like medical treatments which actually cure patients!

By Patrick following x   2018 Apr 13, 4:11pm 687 views   8 comments   watch   sfw   quote     share    


https://arstechnica.com/tech-policy/2018/04/curing-disease-not-a-sustainable-business-model-goldman-sachs-analysts-say/

One-shot cures for diseases are not great for business—more specifically, they’re bad for longterm profits—Goldman Sachs analysts noted in an April 10 report for biotech clients, first reported by CNBC.

The investment banks’ report, titled “The Genome Revolution,” asks clients the touchy question: “Is curing patients a sustainable business model?” The answer may be “no,” according to follow-up information provided.

Analyst Salveen Richter and colleagues laid it out:

The potential to deliver “one shot cures” is one of the most attractive aspects of gene therapy, genetically engineered cell therapy, and gene editing. However, such treatments offer a very different outlook with regard to recurring revenue versus chronic therapies... While this proposition carries tremendous value for patients and society, it could represent a challenge for genome medicine developers looking for sustained cash flow.

For a real-world example, they pointed to Gilead Sciences, which markets treatments for hepatitis C that have cure rates exceeding 90 percent. In 2015, the company’s hepatitis C treatment sales peaked at $12.5 billion. But as more people were cured and there were fewer infected individuals to spread the disease, sales began to languish. Goldman Sachs analysts estimate that the treatments will bring in less than $4 billion this year.

“[Gilead]’s rapid rise and fall of its hepatitis C franchise highlights one of the dynamics of an effective drug that permanently cures a disease, resulting in a gradual exhaustion of the prevalent pool of patients,” the analysts wrote. The report noted that diseases such as common cancers—where the “incident pool remains stable”—are less risky for business.


We have truly horrible incentives at work in our medical system. It will never be maximally profitable to quickly cure patients for a modest cost, so the free market fails here.

This is an excellent argument for government research and government-sponsored treatments. Those presumably would be in the public interest and not profit-driven to keep people sick and paying.
1   dr6B   ignore (1)   2018 Apr 13, 4:32pm   ↑ like (2)   ↓ dislike (0)   quote        

Patrick,

this is "old news" for people who are in business, but unfortunately, general public is clueless. There is a shortage of new antibiotics - bugs get used to them after a while - but development of new antibiotics is not intensively pursued simply because you take them for a while and then stop, so they are not profitable. Result is so-called "superbugs" which do not respond to treatments. If it goes on, there will be more and more "superbugs". Instead, pharma will develop another anti-cholesterol drug since those need to be taken for many years, and which in most cases are useless as the same results can be achieved by diet change and exercise.

Government-sponsored research has a problem that getting drug approved nowadays costs over half a billion, and this kind of money will never be accessible from govt. What happens now is that government-sponsored research develops a drug, which is then "privatized" by a company who gets it through approval (or fails to get it through approval) and takes most profits. I do not know how we can deal with this situation.
2   APOCALYPSEFUCKisShostikovitch   ignore (31)   2018 Apr 13, 5:23pm   ↑ like (0)   ↓ dislike (0)   quote        

If they're not paying, doctors might as well shoot them since they can rake a vig on a gunshot wound.
3   FortWayne   ignore (2)   2018 Apr 13, 5:26pm   ↑ like (1)   ↓ dislike (0)   quote        

I have over years learned to dislike Goldman Sachs.

Vastly differing set of ethics.
4   just_passing_through   ignore (0)   2018 Apr 13, 9:16pm   ↑ like (1)   ↓ dislike (0)   quote        

drB6 says
development of new antibiotics is not intensively pursued simply because you take them for a while and then stop


Part of the antibiotic issue is that IF a pharma develops a new one that works the govt will put controls that severely limit the ability of doctors to prescribe it. This limits profitability etc.. Might not be true anymore but it's something the CEO of Pharmacia brought up in 1999 when he showed up to chat with us after he'd bought our company: Sugen, we were doing cancer drug development.

If still true I'm not sure if that's a good thing or not... It's complicated because a big part of the super-bug resistance comes from over-use-abuse.

We need entirely new tech. Eastern Europeans have used phages quite a bit over the last century which sounds interesting to me. Basically viruses that kill bacteria. I think that meshes well with nano tech etc., and may possibly be the future.
5   mell   ignore (1)   2018 Apr 13, 9:49pm   ↑ like (1)   ↓ dislike (0)   quote        

I don't buy the argument that the pharma industry is trying to delay cures. As mankind ages, there will be plenty of patients with recurring or different conditions. Despite the declining sales their hep c drug was a blockbuster and brought them many billions every year. The alternative would be to use a less effective drug and get run over by the competition. They may focus on development for drug where most money is to be made vs most lives saved, but they would not stall a cure if they can decently monetize on it. Many of these stories are too simplistic, same for gene therapy. It is very promising but often addresses only patients with certain gene expressions in their diseases, and there can be extreme side effects. Plus it's an eternal rat race, eventually viruses and bacteria will adapt and we have to recode our genomic solution, some may last for a long time or even forever, some won't. New conditions/microbes may emerge. There are plenty of patients that get cured of various cancers every year with standard therapies, and they are growing every year. The solutions of the future will most certainly be combo-therapies. That being said, there is nothing wrong with government and/or university funded involvement in medical studies to give competition/collaboration to/with the pharma industry. Also phages are super interesting, but some have also show the opposite effects and they are not without risks. Maybe at some point they may be superior to AB therapy due to rising AB resistance.
6   dr6B   ignore (1)   2018 Apr 14, 8:05am   ↑ like (0)   ↓ dislike (0)   quote        

just_passing_through says
the govt will put controls that severely limit the ability of doctors to prescribe it.

I do not see how it is different from other drugs. Pharmacia-Upjohn-whatever it is called now boss might have been trying to deflect blame for not developing antibiotics.

mell says
I don't buy the argument that the pharma industry is trying to delay cures.
mell says
They may focus on development for drug where most money is to be made vs most lives saved, but they would not stall a cure if they can decently monetize on it.


They will not delay cures, but they surely will not put half a billion of development money into something that brings much less payoff (e.i. something that has to be taken for only 2 weeks).
7   just_passing_through   ignore (0)   2018 Apr 14, 11:07am   ↑ like (0)   ↓ dislike (0)   quote        

drB6 says
boss might have been trying to deflect blame for not developing antibiotics.


You could be right! I wish I could remember the context....
8   just_passing_through   ignore (0)   2018 Apr 14, 11:10am   ↑ like (0)   ↓ dislike (0)   quote        

drB6 says
boss might have been trying to deflect blame for not developing antibiotics.


You could be right! I wish I could remember the context... I'm not sure if someone asked him or he just shared it. This was back in the Vioxx days where we had Celebrex and there was concern about that. I quit shortly after the buyout and went back to biotech.




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